Oman free zones in 2023
- Oman has three Free Trade Zones (FTZ) and two Special Economic Zones (SEZ): i) Al Mazunah FZ ii) Sohar FZ iii) Salalah FZ iv) Duqm SEZ and v) Knowledge Oasis Muscat SEZ;
- Specific economic and free zones benefits include i) 100% foreign ownership, ii) tax exemption iii) lower quota requirements to hire Omani national employees and iv) zero customs duties. Each free zone has its own specific incentive packages;
Advantages and Disadvantages of Oman free zone companies
Advantages of Oman free zone companies
- FZ and SEZ companies may be 100% foreign owned;
- There are no minimum share capital requirements for Oman free zones;
- Exemption on corporate taxes;
- No duties are imposed on goods imported and exported from the free zone;
- Oman free trade zone companies are allowed to trade within Oman without a local agent. A customs duty of 5% applies in these cases.
- Unrestricted repatriation of capital.
Disadvantages of Oman free zone companies
- It is mandatory to lease physical office premises within a free zone;
- At least 10% of the free zone company’s staff must be Omani;
- Knowledge Oasis Muscat requires a paid- up share capital of US$52,000;
- Company licenses are renewable annually after FZ laws are complied with including submitting annual audited financial statements to the free zone authority;
- Some Oman free zones are still under construction.
Sohar Free Zone
- Sohar Port free zone is operational but still under development. Once finished it will cover 4,500 hectares at the town’s Port;
- The port will cluster business into the following industries: i) steel manufacturing and processing ii) trade and logistics iii) oil and gas iv) petrochemicals v) minerals and aggregates industry vi) ceramics vii) food logistics and food processing;
- Sohar Free Zone issues the following type of business licenses: i) industrial ii) light manufacturing and assembly iii) logistics iv) general trade and v) services;
- It offers 100% foreign ownership and 10 years of tax-free operations but requires companies to adhere to 15% Omanisation. The tax exemption period increases if the percentage of Omani staff increases;
- The free zone authorities boast ‘one-stop-shop’ incorporation procedures, shortening business setup to under three weeks.
Salalah Free Zone
- Salalah Free Zone opened in 2005 and is still also under active development. Once finished with all four phases of development, it will cover an area of 19 square kilometres;
- The free zone is adjacent to the super hub port of Salalah on the main equatorial trade routes. Salalah free zone has access to an international airport and Salalah port;
- Licenses offered are i) general trading including import, export & distribution and storage of all goods; ii) specialized trading of defined products, iii) services, and iv) industrial applications, for the import of raw materials, manufacturing of specified products and export of finished products;
- This free zone is particularly suitable for i) chemical and material processing, ii) manufacturing and assembly and iii) logistics and distribution;
- Salalah Free Zone companies can benefit from the US-Oman free trade agreement, that supplies custom duty free access on agricultural products and most of the industrial and consumer goods including textile and apparel products;
- In addition to 100% foreign ownership, other benefits of this zone include i) 0% corporate tax ii) 0% personal income tax iii) no customs or exercise duties on import/export of goods iv) no minimum paid up share capital requirements and v) reduced Omanisation rate of 10%.
Al Mazunah Free Zone
- Established in 1999, Al Mazunah offers 100% foreign ownership and 30 years of tax free operations. If a large number of Oman nationals are hired, then this tax holiday may be extended indefinitely;
- Unlike the rest of Oman, where 30% of employees must be Omani nationals, an Al Mazunah company need only hire 10% locals.
- Yemeni citizens working for Al Mazunah companies do not require work permits. The free zone is located just 4km from the Yemeni border in south west Oman;
- Suitable industries include light manufacturing, trading, and services.
- The Duqm SEZ is one of the largest economic zones in the Middle East, with an area of 2,000 square km;
- The zone area is divided into eight sub-zones aimed at different type of investments, such as i) industry ii) sea port and dry dock iii) tourism iv) fisheries v) logistics, etc.
- The Zone counts with a seaport and an airport, which benefit export-oriented companies that invest in the area;
- Companies registered in this SEZ must comply with the Omanisation rate of 25% and enjoys 30 year income tax exemption.
Knowledge Oasis Muscat SEZ
- This technology park was inaugurated in 2003 and is located near Muscat International Airport;
- Knowledge Oasis Muscat caters to science, IT and knowledge-based businesses and organisations of all sizes;
- Unlike the other FZand SEZs in Oman, this economic zone has a minimum share capital requirement of US$52,000 (OMR 20,000);
- Omanisation requirements start at 10% and increase over five years to 25%.
Comparison of freezones
Oman Free Trade Zone Al Mazunah Salalah Sohar Duqm Knowledge Oasis Summary Area covered by the free zone? 3M sq. km 6 sq. km 45 sq. km 25 sq. km 778 sq km Most popular business sector in the zone? Light industries Manufacturing and logistics Petrochemicals and logistics Light industries and logistics IT services Our Clients can setup a WFOE in the zone? Yes Yes Yes Yes Yes Bonded warehouses available? Yes Yes Yes Yes No Can hire foreign workers? Yes Yes Yes Yes Yes Can secure offshore corporate finance? Yes Yes Yes Yes Yes Can a FTZ company freely remit money abroad? Yes Yes Yes Yes Yes Can trade with other parts of Oman? Yes Yes Yes Yes Yes Time zone? (ahead of GMT) +4 hours +4 hours +4 hours +4 hours +4 hours Is there an airport nearby? Yes Yes Yes Yes Yes Company registration Can the company be incorporated online? No Yes Yes No No How long to setup the company? 6 weeks 4 weeks 4 weeks 6 weeks 7 weeks How long to secure the business license? 4 weeks 3 weeks 3 weeks 4 weeks 5 weeks Foreign investor approval required? Yes Yes Yes Yes Yes Client must travel to Oman for company registration? No No No No No Minimum statutory paid up capital requirement? US$0 US$0 US$0 US$0 US$52K Logistics considerations Physical office space required for new companies? Yes Yes Yes Yes Yes Quality of utilities? Excellent Excellent Excellent Excellent Excellent Average annual industrial space rental per 1000sq. m.? US$2,650 US$2,300 US$2,750 US$3,100 N/A Average annual warehouse space rental per 1000 sq. m.? US$2,600 US$2,200 US$2,500 US$3,000 N/A Attractive for setting up a manufacturing business? Yes (light manufacturing) Yes (manufacturing & assembly) Yes (light manufacturing) Yes (light manufacturing) No Quality of Wi-Fi? Good Good Good Good Good Average monthly electricity prices? (per Kwh) US$0.026 US$0.025 US$0.03 US$0.026 Proximity of sea port in kilometres? 260km 5km 10km 9km 46 km Proximity of airport in kilometres? 260km 18km 25km 20km 25 km Accounting and tax considerations Corporate tax rate (%)? 0% 0% 0% 0% 0% Goods subject to custom duties within the zone? No No No No No VAT imposed on transactions within the zone? No No No No No VAT imposed on goods & services sold in the mainland from 2018? 5% 5% 5% 5% 5% Tax incentives for manufacturing start-ups? Yes Yes Yes Yes Yes Quarterly tax filing required? No No No No No Annual tax returns to be submitted? Yes Yes Yes Yes Yes Annual government inspection required? Yes Yes Yes Yes Yes Annual audit required? Yes Yes Yes Yes Yes Access to double taxation avoidance agreements? Yes Yes Yes Yes Yes Corporate banking and financial considerations Recommended bank for corporate banking? National Bank HSBC Bank of Sohar Bank Muscat Oman Arab Bank How long to setup the bank account? 6 weeks 6 weeks 6 weeks 6 weeks 6 weeks Corporate visa debit cards available? Yes Yes Yes Yes Yes Quality of e-banking platform? Good Very Good Good Good Good English e-banking platform available? Yes Yes Yes Yes Yes Can companies make overseas payments in OR/USD? Yes Yes Yes Yes Yes Can companies secure loans within the zone? Yes Yes Yes Yes Yes Can secures loans from mainland Oman banks? Yes Yes Yes Yes Yes Access to Private Equity/VC funds? Yes Yes Yes Yes Yes Can the company list on the Muscat securities market? Yes Yes Yes Yes Yes Labour considerations Can hire foreign employees? Yes Yes Yes Yes Yes How long to secure the work permit? 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks Client must travel before securing a work permit? Yes Yes Yes Yes Yes Can investors secure a permanent residency? Yes Yes Yes Yes Yes Average monthly salary for local employees? US$4,000 US$4,000 US$4,000 US$4,000 US$4,000
Frequently asked questions
Will I have to hire Omani citizens when I establish an Oman free zone company?Yes. At least 10% of the Omani free zone entity staff must be local hires, although this is lower than on the mainland.
What will be the benefits if I start free zone companies in Oman?Free zone companies offer several benefits including i) 100% foreign ownership ii) no minimum share capital requirements iii) no custom duties on goods entering/leaving the zone and iv) no corporate taxes for 10 years.
How many directors will I be required to appoint in order to register in an Omani FZ?Only 1 director is required for Oman FZ company formation.
How many shareholders are required to incorporate in Oman FZ?Only 1 shareholder is required for starting a free zone business in Oman, whereas other companies in Oman require at least two shareholders.